Cleveland-based Cliffs Natural Resources Inc. (NYSE:CLF), an international mining company that competes with Alpha Natural Resources (NYSE:ANR), has lowered its 2012 production volume estimates by nearly 50% for its Empire iron ore mine in Michigan’s Upper Peninsula because of blast furnace maintenance at one of its North American steelmaking customer’s facilities. 
Even with the cut, the company expects to be in line with its overall projections for 2012′s full-year sales while meeting U.S. iron ore production volumes of 23 million tons.
The importance of iron ore
Cliffs currently derives more than half of its value from the North American iron-ore market, and the company ultimately expects to export almost half of its production, primarily to fast-developing Asian countries. Slowing economic growth in China, the world’s largest consumer of the steelmaking resource, has been putting a dent in iron ore demand. And although China plans to domestically supply 45% of its iron ore needs by 2015, its imports of the material is still expected to surge to 1 billion tons by 2015, up around 60% from 2010.
The coal and iron ore giant, which earlier this year acquired Canadian firm Consolidated Thompson Iron Mines for nearly $5 billion in cash, has been working to increase its presence in mineral-rich Canada, exert greater control over the market for raw materials for making steel, and capitalize on the growing international market for its commodities.
Primed to meet growing international demand
Going forward, robust global demand for natural resources and upward trending prices for iron ore, a key steelmaking ingredient, should contribute to growing revenues and profits for Cliffs, which says it expects to increase iron production by 30 percent and coal production by 55 percent over the next three years to meet increasing demand.
Given Cliffs’ expected ramping up of production while focusing on supplying emerging markets, the company’s stock remains on track to reach its Trefis target.Notes:
- Cliffs Natural Resources Inc. Announces Anticipated Production Curtailment at Empire Mine in 2012, Cliffs news release, Nov. 5, 2012 [↩]